Monthly Archives: May 2023

Marketing on Amazon – The Amazon 1P vs Amazon 3P Dilemma

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The Amazon 1P vs Amazon 3P Dilemma

When it comes to vending products on Amazon, people sell their own items through Amazon’s marketplace and get to fulfill all the orders through FBA [Fulfillment-by-Amazon]. In other words, it’s known as Amazon 3rd party or just simply Amazon 3P.

But ever thought about how exactly Amazon manages to carry all types of brands and products on its own? Well, the company purchases at a wholesale price from many brands, which includes all the small and big brands. They do so through the Amazon 1P or Amazon Vendor.

Both Amazon 3P and Amazon 1P have a massive difference between each other. As a merchant, you need to have a good understanding of them if you’re planning to sell products on Amazon.

Amazon 1P vs Amazon 3P: Understanding the Difference

In this section, you will get a good understanding of Amazon 3P and Amazon 1P and the difference between them. Let’s find out.

Amazon 3P [Amazon Third Party]

Experts have provided evidence that Amazon has listed around 2 million small and mid-size businesses as Amazon 3P [Amazon 3rd Party]. Besides that, based on a 2021 SMB report, around 7,400 items were each minute between September 2020 and August 2021.

This clearly shows that Amazon 3P is extremely profitable on this platform. Besides that, Amazon 3P is an ideal option for all types of mid-size and small businesses where they get to sell their products through “Seller Central.”

Under this Amazon model, all the 3rd-party sellers will list their items on Amazon. They also get the opportunity to fulfill all the orders through FBA or Fulfillment-by-Merchant. Amazon will provide customer support, payment processing, and a website.

But the 3rd-party sellers will be responsible for handling the inventory, optimizing the listings, setting up the prices for all the products, taking care of the advertisement, and many more.

Amazon 1P [Amazon 1st Party]

Also known as Amazon Retail, Amazon 1P is pointed to the direct sales made by Amazon to its customers. Under this model, Amazon buys all the products from the distributors or manufacturers from the “Vendor Central.”

After that, it sells them to all consumers directly through the Amazon platform. The platform is known to own the inventory and is also responsible for the returns, setting up the price, customer service, and inventory management fulfillment.

Experts have pointed out that Amazon recorded e-commerce sales of $671.2 billion back in 2022. Out of that, Amazon 1P sales accounted for $247.2 billion in 2022.

Benefits of Amazon 3P

You will come across some great benefits of the Amazon third-party model, and some of these are:

  • You will be liable for taking care of the pricing authority and also controlling the retail prices.
  • You will have a lot more control over your business because you will have plenty of options when it comes to brand presence, inventory, product details, etc.
  • You can easily generate all the retail instead of the wholesale ones.

Benefits of Amazon 1P

In this section, you will encounter some of the benefits of the Amazon 1P:

  • Get product orders in bulk from Amazon based on an established cadence.
  • You will receive a wide range of advertisement opportunities
  • You have to provide a flat fee instead of the separate marketplace selling fee

Final Words

Amazon 3P and 1P are two different models that are used by businesses and brands to sell their products on Amazon. But both of these models are different from one another, and both of them have their own set of advantages.

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How Online Retailers Can Eliminate Excess Inventory?

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For all the online retailers, excess inventory can be a massive issue. It’s mainly because when this inventory is left unsold, it will keep accruing the carrying cost.

This can be a costly proposition because experts say that the carrying cost is around 20% to 30% of the entire inventory cost of a business. Having excess inventory is also bad for the cash flow.

It’s mainly because excess inventory can lessen the profit margins, increase the inventory cost, can cause overstocking, and will lead to dead stock. But there are several methods through which you can easily terminate the excess inventory. These are:

Keep track of your inventory 

Staying well-updated about which products are selling and which are not can help you eliminate the excess inventory. When certain products do not sell properly, they reach the end of their respective life cycle and have no value.

The best way you can prevent such issues from happening is by keeping track of all the products within your inventory. Experts have provided evidence that around 36% of businesses track their excess inventory against their ESG objectives.

You can remove all those products from the inventory that do not sell properly and replace or increase the quantity of all those products that customers are interested in purchasing. This can also prevent all the products from getting dumped in the landfill.

List your products on multiple marketplaces, or increase visibility on existing marketplace with specialized software and services from Experts in ChannelSale team.

Provide the products as a gift

You can provide excess inventory through free gifts to your customers. This technique certainly works with all the merchandise that is less expensive.

For instance: when you have a full-price item, which is pretty difficult to sell, you can utilize it as a giveaway to all the incentivized shoppers so that they can register for the mailing list. Otherwise, the shoppers can increase their shopper card value, and by doing so, they can obtain $80 worth of free products.

Even though this technique might not generate plenty of revenue, it will surely magnify customer satisfaction and also reduce the stock levels in the warehouse.

Recycle your excess inventory 

Instead of dumping all the products from the inventory in the landfill, you can check them out and see whether or not they can be recycled. The majority of the municipalities have recycling programs. Otherwise, you can look for businesses that are known to take recyclable goods.

You will certainly find a company or someone within your location who is an expert in taking care of obsolete inventory recycling. They also have the skills to load up all the extra products and look for the right home or an alternative option to put them to proper use.

Liquidate the excess inventory 

Once you get to liquidate the excess inventory, you will certainly get the chance to eliminate it completely. In some situations, it might be the best option for business and yourself. The inventory liquidator will purchase all the excess products at a good price.

But remember one thing, these companies do have a habit of “CHERRY PICK” products and will try to buy them from the inventory at a much lower price. Although you might get any profits through liquidation, you will certainly free up capital and space.

Excess inventory is certainly not a great thing for all the online retailers out there. They will not just end up at the landfill but will also take up way too much space in the inventory. That’s why eliminating the excess inventory will certainly help you greatly.

 

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Full-Funnel Commerce: How to Build an Online Strategy for the Entire Consumer Journey?

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How to Build an Online Strategy for the Entire Consumer Journey

Every consumer wishes to have an outstanding experience when they shop from an online store or business. It’s because around 86% of consumers leave a business or brand within 2 seconds because of poor experiences.

Experts have even provided evidence that back in 2022, around 49% of consumers left a brand because of poor customer experience. So, if you want all the consumers to have an excellent customer journey by shopping from your brand, you need a good strategy for it.

There are several ways through which you can easily create an excellent strategy that will help simplify the whole consumer journey. These are:

Personalize the entire experience 

In today’s modern world, personalized service is no longer an option, but it has become crucial. Many customers these days want brands to anticipate all their needs and around 63% of them want to have a personalized experience.

Besides that, 37% of the consumers have claimed that they will not purchase any product or do business with brands that do not provide a personalized experience. Due to such reasons, many businesses have opted for personalized strategies to increase their revenue.

One of the best ways companies can offer personalized experiences is by providing discounts and offers based on consumer behavior. Brands can also provide personalized suggestions to offer their consumers the best experience.

Enhance the UI [User Experience] Navigation 

When the website is not that easy to navigate, it will become difficult for all the customers to fulfill their end goals. Low-quality user experience can frustrate the customers, and they might end up abandoning the application or the website.

Based on 61% of web designers, poor navigation is one of the primary reasons why many customers and visitors leave a particular website. It’s extremely crucial for a business’s website to outline the journey the visitors must take to reach their end goals.

All websites should use logically arranged, easy-to-locate and clear buttons for the navigation menus.

Make the website optimized for the mobile 

Experts have pointed out that 59% of web traffic comes from mobile phones. Many website design companies have also said that the primary reason why people leave websites is that they do not function properly on mobile devices.

Brands optimize their website design for smartphone devices by reducing the size so that it loads faster on the small screen. Besides that, brands have to make sure that their website responds perfectly when consumers access it from their mobile devices.

This will not just provide the consumers with an excellent experience but will also enable them to purchase all the products or items from the website.

Last Note 

Every consumer wants to purchase from a brand that has an outstanding and highly responsive website. That way, they will not just have an excellent experience but will also allow them to navigate from one page to another on the site.

Besides that, businesses should also make their website mobile optimized so that people can access them from their respective mobile devices whenever they want.

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